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Without name on loan, widows are vulnerable

Widow Sandra Vance faces foreclosure and eviction from her Bradenton home after he husband died in April of 2011. Vance has struggled trying to assume the debt her husband left behind. STAFF PHOTO / ELAINE LITHERLAND

Published: Saturday, February 16, 2013 at 7:22 p.m.

Last Modified: Saturday, February 16, 2013 at 7:22 p.m.

BRADENTON - Sandra Vance had her Cypress Bend home built with her physical limitations in mind.

Osteoporosis prevents the East Bradenton widow from climbing a flight of stairs. Chronic bronchitis makes it difficult breathing around carpets, prompting Vance to break out in vicious coughing attacks from the allergens in the fibers.

Now 72, she expected to spend life's final chapter in the single-story home with tile floors and electric appliances — installed because gas fumes make her too dizzy to stand.

But the nation's largest loan servicer now contends Vance must leave that all behind after a three-year foreclosure saga — one that her husband did not live through — revealed problems with the promissory note.

Vance is not alone. Legal experts say similar paperwork mistakes are poised to evict hundreds, if not thousands, of elderly windows throughout Florida from their dream retirement homes.

"It's just horrible," said Kathy Vance, Sandra's daughter. "I know my mother may lose this house. But we will not go without a fight."

Like many recession-battered borrowers, Wells Fargo filed suit against Vance's late husband after the couple fell behind on their payments.

When her husband, Merle, died, Vance lost the authority to assume the mortgage — even though she is listed as an owner on the property's deed.

That is because her name was never on the promissory note tied to the home's loan — a strategy sometimes employed to obtain better financing rates by listing only her husband's income and credit history.

But now, Vance cannot legally defend against the default.

The bank says it will work with Vance to modify the debt, but only after $14,000 in delinquent payments are made current.

The complication is common throughout Florida — the fallout from a high demographic of elderly homeowners, the state's boom-bust real estate cycle and a lingering recession that still grips retirement incomes.

The result has left thousands of Sunshine State widows who are now behind on payments — and lacking a sufficient mortgage note — with no entitlement to their home.

"I wish I could say these are the only people this has happened to, but I can point to 10 more in my office," said Susannah Savitsky, a Bradenton attorney who represents Vance.

"The craziest part is they can now afford to pay. With the click of a button, the bank could make a nonperforming loan preforming again."

Hit by the downturn

Finances started to get tight for the Vance family in 2009.

Merle Vance was still working as a Realtor then. Already retired, Sandra Vance was contributing a fixed $1,337 each month from Social Security.

When the ferocious housing downturn crimped home sales, the phones at her husband's realty office went quiet. Clients were far and few between. So were the commission checks.

Before the couple missed a single mortgage payment, Merle Vance reached out to Wells Fargo to try and reduce his monthly obligation on the three-bedroom, two-bath home they bought in 2004 for $270,000.

To purchase the house, the Vances used their $140,000 life savings as downpayment, later borrowing another $30,000 to add a pool and other renovations. Their monthly payment is about $1,500, more than Vance alone collects each month.

She recalls a Wells Fargo adviser suggesting they intentionally skip a few mortgage payments to qualify for a federal modification program earmarked for delinquent borrowers. They were bound to miss a few anyway.

A deal seemed imminent until Merle began having medical issues related to a pacemaker. When he died in April 2011, so did the lender's cooperation.

The bank hung a foreclosure notice on the Vances' door two weeks later.

"We were in a situation where we were asking for help," Vance said. "We were not asking for much."

Wells Fargo representatives told Vance they could not approve a modification because her name was not affixed to the promissory note, the papers that tie the mortgage to the home.

At the time, Vance didn't think much of it. Her husband made more money and had better credit. She was part of a generation where men usually handled that type of business.

Because the deed was in her name, Vance always assumed the property would be hers if Merle died before she did.

But that is only the case if the house is debt-free.

If the property had not been delinquent, attorneys say, Vance could have transferred the loan with sufficient proof of income.

Wells Fargo, Vance maintains, took a hard stance.

Bank representatives would agree to add her name to the note only after $14,000 in back mortgage payments were paid in full.

But Vance didn't have it.

Wells Fargo says it strives to work with surviving family, as it does with all customers facing hardship. Bank representatives would not elaborate specifically on Vance's situation.

"We continue to try and work with Mrs. Vance on a possible option for homeownership," Wells Fargo spokeswoman Veronica Clemons said.

"If a surviving spouse is not listed on the mortgage note — creating responsibility for the mortgage payment — and the loan is delinquent, we are prevented by investor guidelines related to most investor-owned loans, from assigning the home loan over without proof of affordability."

Across Florida, widows have to fight to keep their homes after spouses die and their income levels drop. Without a promissory note, lenders are not usually willing to play along.

"Without a note, the bank has no obligation to talk to them," said Joseph Lehn, a foreclosure and bankruptcy attorney in Sarasota. "It's a Catch-22. Nobody goes into these situations expecting any problems. But at that point, you have no rights."

There is no public data showing how many foreclosures in Florida have been the result of the death of a spouse.

But more than 1 million widows now live in the Sunshine State, which also held the nation's highest foreclosure rate during 2012, with 3.11 percent of all houses being the subject of a foreclosure filing during the year.

Home defaults in the Sarasota market jumped 30 percent last year — the first annual rise since 2009, according to the housing data provider RealtyTrac Inc.

Legal experts blame the spousal foreclosure problem on poor oversight by those representing buyers at closing, whether it is an attorney or a Realtor.

For surviving spouses like Vance, though, the lack of a signature represents a dangerous trap.

"There are just so many layers that contribute to our foreclosure crisis, and this is one of them," Sarasota real estate attorney David Hicks said. "It really comes down to what is on the note. Nothing else matters, and a lot of borrowers fail to realize that until it is too late."

Kathy Vance recently moved into the house to help her mother meet the bills.

The two have spent the past few weeks packing up boxes of belongings, which sit in stacks throughout the tidy home.

With Sandra Vance's case set to go to trial on Feb. 22, the pair do not know where they will be living next month.

All she can think about now is how things could have been different if she had just picked up a pen and signed alongside her husband.

<p><em>BRADENTON</em> - Sandra Vance had her Cypress Bend home built with her physical limitations in mind.</p><p>Osteoporosis prevents the East Bradenton widow from climbing a flight of stairs. Chronic bronchitis makes it difficult breathing around carpets, prompting Vance to break out in vicious coughing attacks from the allergens in the fibers.</p><p>Now 72, she expected to spend life's final chapter in the single-story home with tile floors and electric appliances — installed because gas fumes make her too dizzy to stand.</p><p>But the nation's largest loan servicer now contends Vance must leave that all behind after a three-year foreclosure saga — one that her husband did not live through — revealed problems with the promissory note.</p><p>Vance is not alone. Legal experts say similar paperwork mistakes are poised to evict hundreds, if not thousands, of elderly windows throughout Florida from their dream retirement homes.</p><p>"It's just horrible," said Kathy Vance, Sandra's daughter. "I know my mother may lose this house. But we will not go without a fight."</p><p>Like many recession-battered borrowers, Wells Fargo filed suit against Vance's late husband after the couple fell behind on their payments.</p><p>When her husband, Merle, died, Vance lost the authority to assume the mortgage — even though she is listed as an owner on the property's deed.</p><p>That is because her name was never on the promissory note tied to the home's loan — a strategy sometimes employed to obtain better financing rates by listing only her husband's income and credit history.</p><p>But now, Vance cannot legally defend against the default.</p><p>The bank says it will work with Vance to modify the debt, but only after $14,000 in delinquent payments are made current.</p><p>The complication is common throughout Florida — the fallout from a high demographic of elderly homeowners, the state's boom-bust real estate cycle and a lingering recession that still grips retirement incomes.</p><p>The result has left thousands of Sunshine State widows who are now behind on payments — and lacking a sufficient mortgage note — with no entitlement to their home.</p><p>"I wish I could say these are the only people this has happened to, but I can point to 10 more in my office," said Susannah Savitsky, a Bradenton attorney who represents Vance.</p><p>"The craziest part is they can now afford to pay. With the click of a button, the bank could make a nonperforming loan preforming again."</p><p><b>Hit by the downturn</b></p><p>Finances started to get tight for the Vance family in 2009.</p><p>Merle Vance was still working as a Realtor then. Already retired, Sandra Vance was contributing a fixed $1,337 each month from Social Security.</p><p>When the ferocious housing downturn crimped home sales, the phones at her husband's realty office went quiet. Clients were far and few between. So were the commission checks.</p><p>Before the couple missed a single mortgage payment, Merle Vance reached out to Wells Fargo to try and reduce his monthly obligation on the three-bedroom, two-bath home they bought in 2004 for $270,000.</p><p>To purchase the house, the Vances used their $140,000 life savings as downpayment, later borrowing another $30,000 to add a pool and other renovations. Their monthly payment is about $1,500, more than Vance alone collects each month.</p><p>She recalls a Wells Fargo adviser suggesting they intentionally skip a few mortgage payments to qualify for a federal modification program earmarked for delinquent borrowers. They were bound to miss a few anyway.</p><p>A deal seemed imminent until Merle began having medical issues related to a pacemaker. When he died in April 2011, so did the lender's cooperation.</p><p>The bank hung a foreclosure notice on the Vances' door two weeks later.</p><p>"We were in a situation where we were asking for help," Vance said. "We were not asking for much."</p><p>Wells Fargo representatives told Vance they could not approve a modification because her name was not affixed to the promissory note, the papers that tie the mortgage to the home.</p><p>At the time, Vance didn't think much of it. Her husband made more money and had better credit. She was part of a generation where men usually handled that type of business.</p><p>Because the deed was in her name, Vance always assumed the property would be hers if Merle died before she did.</p><p>But that is only the case if the house is debt-free.</p><p>If the property had not been delinquent, attorneys say, Vance could have transferred the loan with sufficient proof of income.</p><p>Wells Fargo, Vance maintains, took a hard stance.</p><p>Bank representatives would agree to add her name to the note only after $14,000 in back mortgage payments were paid in full.</p><p>But Vance didn't have it.</p><p>Wells Fargo says it strives to work with surviving family, as it does with all customers facing hardship. Bank representatives would not elaborate specifically on Vance's situation.</p><p>"We continue to try and work with Mrs. Vance on a possible option for homeownership," Wells Fargo spokeswoman Veronica Clemons said.</p><p>"If a surviving spouse is not listed on the mortgage note — creating responsibility for the mortgage payment — and the loan is delinquent, we are prevented by investor guidelines related to most investor-owned loans, from assigning the home loan over without proof of affordability."</p><p><b>A dangerous trap</b></p><p>Real estate attorneys say the situation confronting Vance is not unusual.</p><p>Across Florida, widows have to fight to keep their homes after spouses die and their income levels drop. Without a promissory note, lenders are not usually willing to play along. </p><p>"Without a note, the bank has no obligation to talk to them," said Joseph Lehn, a foreclosure and bankruptcy attorney in Sarasota. "It's a Catch-22. Nobody goes into these situations expecting any problems. But at that point, you have no rights."</p><p>There is no public data showing how many foreclosures in Florida have been the result of the death of a spouse.</p><p>But more than 1 million widows now live in the Sunshine State, which also held the nation's highest foreclosure rate during 2012, with 3.11 percent of all houses being the subject of a foreclosure filing during the year.</p><p>Home defaults in the Sarasota market jumped 30 percent last year — the first annual rise since 2009, according to the housing data provider RealtyTrac Inc.</p><p>Legal experts blame the spousal foreclosure problem on poor oversight by those representing buyers at closing, whether it is an attorney or a Realtor.</p><p>For surviving spouses like Vance, though, the lack of a signature represents a dangerous trap.</p><p>"There are just so many layers that contribute to our foreclosure crisis, and this is one of them," Sarasota real estate attorney David Hicks said. "It really comes down to what is on the note. Nothing else matters, and a lot of borrowers fail to realize that until it is too late."</p><p>Kathy Vance recently moved into the house to help her mother meet the bills.</p><p>The two have spent the past few weeks packing up boxes of belongings, which sit in stacks throughout the tidy home.</p><p>With Sandra Vance's case set to go to trial on Feb. 22, the pair do not know where they will be living next month.</p><p>All she can think about now is how things could have been different if she had just picked up a pen and signed alongside her husband.</p><p>"I put a lot of money into this house," Vance said. "It is my home."</p>